Market news

14 January 2022

GBP/USD bulls unable to break above the 200-DMA and defend the 1.3700 figure

  • The British pound falls for the first time in the week, retreats from weekly highs.
  • Worse than expected, US economic data failed to boost the GBP.
  • Robust UK’s economic data failed to underpin the GBP.
  • GBP/USD Technical Outlook: Failure at the 200-DMA opens the door for a fall towards the 100-DMA.

On Friday, a pack of solid UK macroeconomic data failed to underpin the British pound, which struggled to cling to the 1.3700 figure, falling during the New York session. At press time, the GBP/USD is trading at 1.3670. It is worth noting that in the last hour, the US Dollar Index reclaimed the 95.00 level, up some 0.25%, sitting at 95.05, underpinned by the rise of the US 10-year T-bond yield, up to 1.75%, a three basis points gain.

The market sentiment is downbeat, as shown by the majority of the European equity indices trade in the red, while the US stock indices record losses between 0.05% and 0.73%. In the FX market, safe-haven peers, like the USD, the JPY, and the CHF, appreciate.

US Retail Sales and Industrial Production disappoint

On Friday, the US Department of Commerce unveiled December’s Retail Sales report, which showed a contraction of 1.9%, worse than the -0.1% estimated by economists. Excluding gasoline and autos, slid, even more, 2.5%, lower than November’s 0.1% drop. In the meantime, US Industrial Production shrank 0.1%, when analysts forecasted a 0.3% growth.

Adding fuel to worse than expected US economic data releases, the UoM Consumer Sentiment fell to 68.8, versus 70.0 estimated. 

In the overnight session for North American traders, the UK economic docket featured the Gross Domestic Product for the UK in November rose 0.9%, the first time compared to pre-pandemic levels from February 202. Meanwhile, Industrial Production increased 1% in November, compared to the October reading.

Concerning the UK’s Covid-19 cases, the UK reported 99,652 new Covid-19 cases and 270 deaths, lower than the 335 reported on Thursday.

GBP/USD Price Forecast: technical 

The GBP/USD daily chart depicts a formation of an evening star candle pattern, right at the confluence of the 200-DMA that could propel the GBP/USD towards the 100-DMA.

On the way down, the first support would be January 12 daily low at 1.3621. A breach of the latter would expose the confluence of the January 11 daily low and the abovementioned 100-DMA at 1.3551. If that level gives way, the GBP/USD could be tumbling towards 1.3500.

 

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